Property market sentiments 2011

[hopeful]

thats becos they already have alot in the prime districts .. so buy some outside ccr

as a new investor coming in for first time i really doubt they would go outside ccr for their first investment

Actually i know of some Indonesians preferring to invest in mass/mid than luxury now. Very surprised as well.

I concur, my own relatives CCR first and then RCR/OCR from 2009 onwards. As for me, I am core D1,D2,D9,D10 fan.

[mantrix]

if i am an investor from oversea with money to burn .. i wont consider D23 either


MBS will be first choice .. then maybe Reflections , sentosa

probably not even D9/10 ...D11 is out as well

exactly my point - i used a district as an example that was non-CCR that's all.

What I was saying was that CCR no longer has the appeal or desirability it used to command...

[sh]

exactly my point - i used a district as an example that was non-CCR that's all.

What I was saying was that CCR no longer has the appeal or desirability it used to command...

CCR will be attractive to inventors for the simple reason that the units are easier to lease out than non CCR. Cash flow is important too for investors.

[stalingrad]

CCR will be attractive to inventors for the simple reason that the units are easier to lease out than non CCR. Cash flow is important too for investors.

before you said that, you should've checked propetyguru to see how many units in ccr are for rent and have been left unoccupied for months. my friend's casabella unit has been collecting ants for 4 months. no one even phoned.

[teddybear]

That is not the only reason, there are several others:
1) If a person has $50m to invest in properties, is he going to buy 5 properties of $10m each which is easier to manage or 50 properties of $1m each? How to manage 50 properties?

2) Cheap properties are usually rented to tenants who don't take care, have to deal with these tenants who are always not paying on time, and disappearing frequently etc. The security deposit are always insufficient to cover the repairs when they left, and you may have to rent to several co-tenants and deal with them rather than just 1 tenant etc.

CCR will be attractive to inventors for the simple reason that the units are easier to lease out than non CCR. Cash flow is important too for investors.

[sh]

before you said that, you should've checked propetyguru to see how many units in ccr are for rent and have been left unoccupied for months. my friend's casabella unit has been collecting ants for 4 months. no one even phoned.

ok point noted....

Let me rephrase that. Investor's should invest in properties that are in demand from tenants. eg properties near MRT, preferably in the CCR

[stalingrad]

teddy, your common sense arguments always make me laugh.

have you heard of diversification; i.e., don't put all your eggs in one basket? if you invest all your 2 million in rivergate or duchess residences, you may go months without any rental income. if you put your 2 millions in two OCR condos, you are sure to get some rental income. that is just common sense.

[sh]

That is not the only reason, there are several others:
1) If a person has $50m to invest in properties, is he going to buy 5 properties of $10m each which is easier to manage or 50 properties of $1m each? How to manage 50 properties?

2) Cheap properties are usually rented to tenants who don't take care, have to deal with these tenants who are always not paying on time, and disappearing frequently etc. The security deposit are always insufficient to cover the repairs when they left, and you may have to rent to several co-tenants and deal with them rather than just 1 tenant etc.

$10m dollar properties give lousy returns leh
50MMs will give much better return Let the agents run around for you lor... if you have 50mil.

Don't want to deal will cheap tenants that come with cheap properties....

Hmmm.... i'm very hard to please.... too cheap also cannot, too ex also cannot.... Have to find sweet spot between the 2....

1mil MM in CCR near MRT leased to single professional would be about right....

[teddybear]

Ha ha ha! So funny. Sure get some rental income? Ok ok. When tenant left, your rental income + security deposit barely sufficient to repair all the damages done to make the place fit for next tenant. Think you don't have such experience before.

teddy, your common sense arguments always make me laugh.

have you heard of diversification; i.e., don't put all your eggs in one basket? if you invest all your 2 million in rivergate or duchess residences, you may go months without any rental income. if you put your 2 millions in two OCR condos, you are sure to get some rental income. that is just common sense.

[teddybear]

Let agent manage all 50 properties? Think you better get a reliable professional otherwise your rental money will disappear hor, and you get invoice for repairs that never occurred etc.

$10m dollar properties give lousy returns leh
50MMs will give much better return Let the agents run around for you lor... if you have 50mil.

Don't want to deal will cheap tenants that come with cheap properties....

Hmmm.... i'm very hard to please.... too cheap also cannot, too ex also cannot.... Have to find sweet spot between the 2....

1mil MM in CCR near MRT leased to single professional would be about right....

[kane]

Quality of tenant is really down to individual luck. I heard of a corporate tenant in a quality project, almost tore the place apart. Lucky owner can claim against the company.

[kane]

Let agent manage all 50 properties? Think you better get a reliable professional otherwise your rental money will disappear hor, and you get invoice for repairs that never occurred etc.

Invoices from shell companies??

[kingkong1984]

All these are crap when u have CCR owners buying OCR properties. Of course CCR will go up. The mid point between the rich and the poor hdb folks. OCR is the middle class.

[mantrix]

If I have 50million, I am looking more at cap appreciation since I have holding power.

Will probably buy 2 GCBs or maybe 4-5 landed properties if I really need to invest in properties.

Gotta be realistic come on - teddy you really need to stop giving those extreme examples lah...those may be commonplace in another universe

[sh]

Let agent manage all 50 properties? Think you better get a reliable professional otherwise your rental money will disappear hor, and you get invoice for repairs that never occurred etc.

That's the price to pay for being lazy....

with 50 property, you can hire someone full time to manage them....

dream on....

[Regulators]

you don't need to educate people about stamp duty, legal fees etc as these are things everyone here knows. I bought with 80% loan coz my other properties are all fully paid. I have been debtless for a long time until my recent RH purchase.

You mentioned that govt has a lot of land in bukit batok for residential housing, you may perhaps enlighten us on which plots? As far as i know, apart from the jade, the next closest condo to bt batok mrt is regent heights and i don't see any land within a 1km radius of bt batok mrt which is suitable to build a condo development. I think you are just speaking from the top of your head with little or no insight. You seem quite ignorant of the fact that new developments tend to jack up prices of surrounding older projects, which was why investors bought the treehouse in anticipation of that. caspian owners will also stand to gain with the launching of lakefront in case you are not aware.

UOB valued a similar 3 bedder to mine for 860k and based on the current market this is considered cheap, with a 614sf one bedder at tennery already asking for 8xxk before discount. If I sell at 880k, the GROSS ROI is 71.4% and the NET ROI after taking bank compensation, stamp duty and all the misc fees is about 50%. In thecurrent market, a 2 bedder above #20 in RH is already asking for the price i paid for my 3 bedder so i have made a safe bet. If i were to hold my unit for the next 20 years, by then my mortgage would have been fully paid or almost. Taking a conservative gross rental income for my unit to be 3k, converts to gross returns of 720k after 20 years. With 65 - 68 more years left on the lease, i will be sitting on positive equity after 20 years and a posibility of an en bloc. I am not interested in a measly profit even if i am able to flip my unit next week, my horizon of investment for this unit is long term.

There are a few things you didn't consider:

1) This is your first property? Otherwise why down payment is 20% and not 30%? So ROI much lower (also have not considered costs as in (2)). If so, first and only property how to be for investment & not for own stay?

2) You have to consider that if you sell:
+ Legal fees $3000+
+ buyer stamp duty 3%
+ seller stamp duty 3% (if sell within 1 year)
+ agent fee 1%

3) For mass market properties, smaller unit always higher $PSF. So you can't take 2-rm $PSF for comparison. Also, their unit may be renovated (hence can sell at higher price) while yours aren't.

4) Advertised is just that - "advertised". Wait till you sell at that price first.

5) You think you hold 20 years still got value?

6) Built by FEO in 1997(?), too many rumours about poor quality (can't prove real or not but sure have effect on buyers' mentality towards the estate) and don't think people will buy at premium from you. Don't think the rental yield can sustain going forward?

7) Too many people make money from 1 deal and subsequently lose bigger money in other deals (not to mention your profit is not already in the bag since you have not sold. To sell, you need to incur all the costs mentioned in (2)). Too early to trumpet yet.

8) Govt still have lots of land in Bukit Batok / HillView / Upper Bukit Timah / Bukit Panjang areas, supply can be quite huge even if price rises, so nett can't expect big price increase. MRT effect already factored in.

[Regulators]

you are right. Any idiot would know that when an investor buys for rental yield, they would usually look for RCR/OCR rather than CCR. It is so much easier to buy 2 OCR condos at 750k and rent out at 3k each compared to paying 1.5 mil for a mickey mouse apartment in D9 and and renting it out for 6k a month. Buying into a branded district does not necessarily make good rental investment.

teddy, your common sense arguments always make me laugh.

have you heard of diversification; i.e., don't put all your eggs in one basket? if you invest all your 2 million in rivergate or duchess residences, you may go months without any rental income. if you put your 2 millions in two OCR condos, you are sure to get some rental income. that is just common sense.

[reuters]

you don't need to educate people about stamp duty, legal fees etc as these are things everyone here knows. I bought with 80% loan coz my other properties are all fully paid. I have been debtless for a long time until my recent RH purchase.

You mentioned that govt has a lot of land in bukit batok for residential housing, you may perhaps enlighten us on which plots? As far as i know, apart from the jade, the next closest condo to bt batok mrt is regent heights and i don't see any land within a 1km radius of bt batok mrt which is suitable to build a condo development. I think you are just speaking from the top of your head with little or no insight. You seem quite ignorant of the fact that new developments tend to jack up prices of surrounding older projects, which was why investors bought the treehouse in anticipation of that. caspian owners will also stand to gain with the launching of lakefront in case you are not aware.

UOB valued a similar 3 bedder to mine for 860k and based on the current market this is considered cheap, with a 614sf one bedder at tennery already asking for 8xxk before discount. If I sell at 880k, the GROSS ROI is 71.4% and the NET ROI after taking bank compensation, stamp duty and all the misc fees is about 50%. In thecurrent market, a 2 bedder above #20 in RH is already asking for the price i paid for my 3 bedder so i have made a safe bet. If i were to hold my unit for the next 20 years, by then my mortgage would have been fully paid or almost. Taking a conservative gross rental income for my unit to be 3k, converts to gross returns of 720k after 20 years. With 65 - 68 more years left on the lease, i will be sitting on positive equity after 20 years and a posibility of an en bloc. I am not interested in a measly profit even if i am able to flip my unit next week, my horizon of investment for this unit is long term.

Teddy, is your RH rented out already? Are there really takers for the area in Bukit Batok? How much is it going for (rental)?

[Regulators]

i intend to rent out for 3.5k fully furnished. if can't get it at 3.5k i will settle for 3k in the worst case scenario. 2bedders are being rented out for 2.7k to 2.9k so i am very optimistic as my unit is on high floor in the premium tower of the premium stack. my completion is some time in March so will start looking for tenant closer to that date.

Teddy, is your RH rented out already? Are there really takers for the area in Bukit Batok? How much is it going for (rental)?

[reuters]

i intend to rent out for 3.5k fully furnished. if can't get it at 3.5k i will settle for 3k in the worst case scenario. 2bedders are being rented out for 2.7k to 2.9k so i am very optimistic as my unit is on high floor in the premium tower of the premium stack. my completion is some time in March so will start looking for tenant closer to that date.

Do you think there really will be a scenario in the next 1-2 years when more condos TOP and people start lowering their rentals by a big margin because they cannot find rentals? What's your opinion of condos in West Coast, East Coast and Balestier? Will they still be attractive to prospective tenants?

[Regulators]

Rental in west coast will not be very fantastic as there isnt much of a heartland appeal with the standard malls, eateries and amenities. As for east coast, too many mini boutique apartments up for rent, so i think larger condos like One Amber, Silversea, Costa Del Sol etc will be best to attract good yields. It has been donkey years and despite having no MRT nearby, you still find Bayshore and Bayshore Park a favourite among expats. Many expats like living in big enclosed communities with full condo facilities so such properties are good for rental. All those tiny developments in TK may be hard to satisfy tenants unless close to Kembangan MRT. Those renting Balestier will be those tenants who do not want to pay ridiculous rentals for D9, 10 and 11 and yet want a reasonable proximity to town.

Whether there will be a price drop in rental very much depends on the location of the condo. If there are only 2 condos within 700m radius of bukit batok central and many tenants want to live in this estate, then it is the landlord's call when it comes to pricing. There is no point telling people there are many condos in hillview or jurong renting cheaper when tenants want to live in bukit batok. Condo rentals in HDB estates must also look at HDB rentals in the vicinity. If a 5 rm hdb flat in bt batok central is already renting for 2.5k, it would be much easier for a 2 bedder condo near the central to ask for 2.7-2.8k and a 3 bedder in the same condo to ask for 3k or more. My friend who owns a 3 bedder at hillington used to rent his unit for 4k a month some years back to a European expat and when rental fell, he renewed the rental for 3k plus a month.

Do you think there really will be a scenario in the next 1-2 years when more condos TOP and people start lowering their rentals by a big margin because they cannot find rentals? What's your opinion of condos in West Coast, East Coast and Balestier? Will they still be attractive to prospective tenants?

[proud owner]

you are right. Any idiot would know that when an investor buys for rental yield, they would usually look for RCR/OCR rather than CCR. It is so much easier to buy 2 OCR condos at 750k and rent out at 3k each compared to paying 1.5 mil for a mickey mouse apartment in D9 and and renting it out for 6k a month. Buying into a branded district does not necessarily make good rental investment.

often times, it depends on the agents showing the units ...

i have expats colleagues , who by default, use the company's appointed agent .. and the agents always show them prime districts at very high rental ...

i always "sabo' the agent by telling these expats colleagues to ask to view condos outside prime districts (outside 9,10,11)

they were amazed by the price differences and that some of these outside areas were actually good locations or have good amenities ..

so if you have agents who only want to show prime locations to incoming renters, cos they get 2mths comms for a 2 yr lease ..of course they want you to rent the most expensive ones ..

i dunno abt other company, but for mine, say if i like a unit thats above my housing allowance, i can nego for a higher allowance ...

so to say whether prime easier to rent or ocr easier to rent ... no clear answer

[Regulators]

from what i understand about corporate rentals, how much rental allowance the employee gets depends on his ranking and position in the company. Companies used to rent properties on behalf of their employees, but these days, it is much easier for companies to just give rental allowance and not be bound by the tenancy agreement which can be messy. Rental allowances vary but i believe some expats have only enough to rent OCR properties.

often times, it depends on the agents showing the units ...

i have expats colleagues , who by default, use the company's appointed agent .. and the agents always show them prime districts at very high rental ...

i always "sabo' the agent by telling these expats colleagues to ask to view condos outside prime districts (outside 9,10,11)

they were amazed by the price differences and that some of these outside areas were actually good locations or have good amenities ..

so if you have agents who only want to show prime locations to incoming renters, cos they get 2mths comms for a 2 yr lease ..of course they want you to rent the most expensive ones ..

i dunno abt other company, but for mine, say if i like a unit thats above my housing allowance, i can nego for a higher allowance ...

so to say whether prime easier to rent or ocr easier to rent ... no clear answer

[kingkong1984]

Rent CCR at a high price if money coming from employer. If given fixed allowance, likely renting OCR region. International schools is a key link. Enclave of race is another and brand new furnished preferred.

Blue horizon was very popular with japanese due to Japanese schools near by. But only up to varsity park, botannia etc top. They like to stay together and would not mind slightly higher rents.

No sure winners in CCR or OCR. It has to be bought with the possible buyers in mind if intended as an investment. Self stay gain on inflation. Capital gains are brought by key commercial, public amenities and population demand for that area.

Sentosa cove, cheap before IR. IR up and price up.
The sail cheap due to SARS. IR up, price up.
Nex up, price up for tat area.
New university up, price up for tat area
MRT link news, price up
MRT up, price up
TOP, price up

But price down are not so clear as most would ask for matching valuation.

[teddybear]

I have no RH. I wll be nuts & an idiot to buy such property (as they have no long-term investment value).

Teddy, is your RH rented out already? Are there really takers for the area in Bukit Batok? How much is it going for (rental)?

[hopeful]

you are right. Any idiot would know that when an investor buys for rental yield, they would usually look for RCR/OCR rather than CCR. It is so much easier to buy 2 OCR condos at 750k and rent out at 3k each compared to paying 1.5 mil for a mickey mouse apartment in D9 and and renting it out for 6k a month. Buying into a branded district does not necessarily make good rental investment.

Who buys purely for rental yield anyway?
Capital gains is the way to make money.
Rental is only to sustain the mortgage.

How come nobody ever answer my questions?
1) you make more money from net rental or from capital appreciation?
2) Those of you who goes for rental yield, you never hope for capital appreciation?

[devilplate]

Who buys purely for rental yield anyway?
Capital gains is the way to make money.
Rental is only to sustain the mortgage.

How come nobody ever answer my questions?
1) you make more money from net rental or from capital appreciation?
2) Those of you who goes for rental yield, you never hope for capital appreciation?

I only buy when i feel its undervalued n yet yield is good.... In short i go for both combi.... Sgs bond much safer at ard 3 pct.... Might as well go for tat if purely looking at rental yield

[hopeful]

I only buy when i feel its undervalued n yet yield is good.... In short i go for both combi.... Sgs bond much safer at ard 3 pct.... Might as well go for tat if purely looking at rental yield

That is my point. Owners here seems to put the emphasis on rental yield and nothing else but rental yield.
99LH cheaper, better rental yield blah blah.....
At the end of the day, when do you make most of your money from?
The simple answer is: When you sell your property. - that's when you make the bulk of your money.
Most people here take mortgages to buy properties. Please calculate your NETT yield, don't talk about GROSS. After 10 years, how much money you accumulate from NETT yield? Is that even enough to put downpayment for another condo????

[devilplate]

That is my point. Owners here seems to put the emphasis on rental yield and nothing else but rental yield.
99LH cheaper, better rental yield blah blah.....
At the end of the day, when do you make most of your money from?
The simple answer is: When you sell your property. - that's when you make the bulk of your money.
Most people here take mortgages to buy properties. Please calculate your NETT yield, don't talk about GROSS. After 10 years, how much money you accumulate from NETT yield? Is that even enough to put downpayment for another condo????

but if yield is bad....it may also indicates tat it is overpriced

[hopeful]

but if yield is bad....it may also indicates tat it is overpriced

was Orchard Road FH yield ever the same as like hmmmm, some OCR LH condos or for more extreme comparison, Orchard Road FH yield ever higher than HDBs? in 1990s,2000s?
so Orchard Road FH is perpetually overpriced as compared to HDB?